War on landlords sees mum and dad investors flee the market

Investors are being further pushed out in the cold as the weight of regulation, taxes and unrealistic reforms mooted by government, sees mum and dad investors fleeing the rental market, leaving tenants in an increasing dire situation.

Startling new research shows hundreds of thousands of rental properties have been stripped from rental markets around the nation with investors offloading properties in Victoria and Queensland in particular – the states leading the war on private landlords according to Property Investment Professionals of Australia (PIPA).

Their ninth annual Property Investor Sentiment Survey shows a surge in the sale of rental dwellings.

“A staggering 12.1 per cent of investors sold one or more of their rental properties in the past 12 months around the nation,” PIPA chair Nicola McDougall said.

“About 43 per cent of respondents in this year’s survey sold to an existing homeowner, while 30 per cent sold to a first-home buyer.

“Just 24 per cent sold to another investor – down from 33 per cent last year – which means the majority of those investment properties were likely removed from the rental market.”

Ms McDougall said last year’s survey found 16.7 per cent of investors had sold at least one property in the previous two years.

“Clearly, this would explain the undersupply of rental properties available for tenants around the nation,” she said.

“These results are yet another stark illustration of the mass exodus of private investors from the market.”

Using 2021 Census as the baseline of 2.477 million private rental dwellings in Australia, it is estimated that hundreds of thousands of rental properties were sold in the past three years, with the majority of these bought by existing homeowners or first-home buyers.

Drilling down into this year’s survey data, 24.8 per cent of investors sold one or more properties in Melbourne over the past year, while 23.3 per cent sold in Brisbane.

Ms McDougall said, like much of the country, Victoria and Queensland are in the grips of a rental crisis driven by a drastic undersupply of homes and significant demand from tenants.

“Those states are leading the charge with restrictive, unfair and inefficient legislative reforms that adversely impact property investors,” she said.

McDougall said that increasing taxes are the number one reason to sell and it remains clear investors are selling up or avoiding buying due to attacks by governments disguised as reform that make owning a rental difficult.

Respondents cited the following as major reasons for selling:

• Governments increasing or threatening to increase taxes, duties, and levies that make property a less attractive asset to hold (47 per cent)
• Changing tenancy legislation (43 per cent)
• Talk of rental freezes (34.6 per cent)
• Rental increase limits or caps (27.7 per cent)

Regional Victoria agent, Michael Ferris from Ferris Gold, said it is clear that the current climate is not conducive to mum and dad investors.

“The Victorian government’s policies don’t seem to favour small-scale investors, who have historically contributed to distributing wealth among the population,” Mr Ferris said.

“These policies appear to align with a left-wing, big-government model, which may not fully appreciate the contribution of small investors and entrepreneurs.

“Another factor influencing this trend is the ever-rising property prices in our region, which have led to lower investment yields.

“The reforms introduced to heavily favour tenants have also discouraged investors and added to the perception that property investment is becoming increasingly challenging.”

Mr Ferris said the general consensus among other real estate agents across Australia was that recent changes in the property market forced many investors, including themselves, to seek opportunities elsewhere.

“The enduring truth remains that bricks and mortar have been a trusted and stable investment option.

“As Victoria grapples with financial challenges, our government must focus on stimulating the property market rather than implementing policies that burden it,” Mr Ferris concluded.